Thursday, June 28, 2007

Best Buy

After selling my AAV, I didn't want to let my money sit around for too long so I started looking for new stocks to buy. After a lot of reading, I stumbled across an article comparing Best Buy, Radioshack, and Circuit City. The author concluded that all three are good buys. I checked them out and, using the wonderful research tools at TD Ameritrade, concluded that the author was pretty much right. As luck would have it, Best Buy fell pretty significantly right before I did this research (last week). So I bought some. I am excited that Best Buy is making forays into China and the news of the stock buyback was of course welcome.

Now my IRA is composed of 20 shares BBY, 20 shares GE, and 5 shares AGG. The AGG is there in preparation for my bond-options strategy, which I'm investigating still. Hopefully TD Ameritrade will be more generous than Sharebuilder with their options policy for IRAs.

Tuesday, June 26, 2007

Sharebuilder's Options policy for IRAs

I applied for options trading in my Sharebuilder IRA account and was approved. However, apparently it is Sharebuilder policy to only allow options "level 1" trading in IRAs. That means you can only "write" (sell) covered calls. In other words, the only thing they let you do is buy, say, 500 shares of GE and then sell 5 call option contracts on those shares. They say that is the least risky options play. BS! Now, granted, if you do not have a lot of discipline, uncovered options can be very dangerous. You can easily lose 100% of your investment on just about every options deal. However, like I said in a previous post, the conservative play is to only invest about 5% of your money in options. The incredible leverage that options provide turn that paltry 5% into a serious investment. The other 95% of your money can be in a safe investment like bonds, getting around 5% interest. That would mean that in the worst case, you lose NOTHING over the course of a year, and in the best case, you get about the same return as if you had been invested 100% in stocks. Just think how useful that would be in times like stock market crashes... just the sort of thing you worry about with your IRA. Because you can't pump a bunch of extra money in if the market goes way down!

Ah well, I'm learning why IRAs need more conservative investment strategies than normal stock trading accounts. I'm just disappointed that I can't play around with the option-bond strategy, which to me sounds like just about the safest possible investment strategy that still gives you some decent return. Ever since I learned about options, I've realized that they are one of the tools of the rich. Little things like Sharebuilder's policy keep this valuable tool out of the hands of small investors. If I had $1 million in net worth I'm sure I could find a broker willing to let me trade any type of option I want in my IRA.

Wednesday, June 20, 2007

Sold AAV today

Well I sold my AAV today. The very high volume (2.9 million shares, average volume 870k!) combined with the slow decrease in price from the morning made me feel too nervous. It's remarkable that it didn't fall more, so maybe I made a mistake. My theory is that a lot of people like me who got in at $10 or so are taking profits, plus the people who got burned by the fall even earlier are saying "Hey let me get out now before it goes down AGAIN."

I thought I'd be getting into this stock for slow growth with a great dividend but it didn't work out that way. Getting the equivalent of nearly 3 years' worth of the dividend in 2 months was too attractive to pass up. I still really like the stock though, so hopefully it will fall some in a big sell-off and I'll get back in! If it doesn't fall within a week I'll get back in anyway. I can't wait until I'm approved for options trading so I can hedge against this sort of thing without dumping all my shares!

Now if I were following deminvest's "free stock strategy" I would have sold only enough shares to get back my initial investment, then kept the remaining shares forever, earning a nice dividend. I like his strategy because it helps you get out of a stock at a good time and not be too greedy. It's also got a mixture of rational trading and long-term holding that is very good.

I haven't come up with a rigorous exit strategy for my stocks yet so I'm just going by my instincts, which may of course be very dangerous.

Tuesday, June 19, 2007

The emergency fund

I've been reading a lot of personal finance blogs over the past few weeks and one of the most common recommendations is to establish an emergency fund. I don't have an emergency fund so I've been getting a little worried about it since I've seen how important it is to others.

On the other hand, I don't fully understand them yet. Most people seem to keep their emergency fund in a savings account, which is one of those "lessons from dad's generation" that I want to avoid. Savings accounts exist to make banks richer after all. If you get one of those high-interest saving accounts, things are a bit better... but still, your money is making more for the banks than for you.

I was thinking today on my drive home from work about what to do. One thought was to keep my emergency fund in the form of bonds in my stock account. Not even bonds, but a bond ETF like AGG or SHY. These funds invest in bonds so they're very very stable. If you look at AGG's chart, you'll see it's varied only a few percent in the last 5 years. In the meantime, it returns a 4.78% dividend, divided into monthly payments. This is better than most savings accounts, except the high-interest ones that can have 5% or even 5.05% (the highest I've seen). So why not do that? Well, the biggest advantage of having it in your stock trading account is equity. It's like a big chunk of gold sitting in your account giving it weight. One day you'll say, gee I want to buy a few shares of XYZ and hold onto them for a few days -- but I have no money! No problem, you can use margin to buy them, and the margin will be secured by your bonds.

An even better strategy is to say, ok I have $2000 in my bonds, so I'll get about $100 interest this year. Therefore I'll buy $100 of options in XYZ! Downside: you make nothing in interest (about the same as keeping your emergency fund in a major bank... I'm looking at you Wachovia!). Upside: you'll make more than 5% overall, maybe significantly more. That's why options are cool, if you use them responsibly. They let you limit your downside (you can only lose your small investment) while having an unlimited upside. Because of the massively high leverage that options provide, combining them with a backbone of bond funds for guaranteed income means that your account will basically never *lose* money but will generally do much better than 5%.

I've been reading about options for a while but have never actually bought or sold them. I am very excited about using that strategy, however.

If an emergency comes up (which should be very rare) you can get out of the bond fund pretty quickly since it's traded on the stock exchange (yay ETFs). From there, a lot of brokerages let you write checks against your account; some even have debit cards. To me, it's no more trouble than going to the bank in person to withdraw, or transferring your emergency fund from the savings account to your checking account online.

I don't think it's the accessibility that defines the emergency fund, but rather the guarantee of availability, which I think this strategy provides adequately.

Strange price movements

Today, AAV and GE both were up over 3% at one point. I thought, "Gee I should sell before they go down," but I stopped myself. Yes, you heard right. I'm already worried about stocks that I've owned for less than 3 months. Some patient investor I am! On the other hand, I did stop myself.

But what is patience? Must a patient man have slow reflexes? I think the most important quality of being a patient investor is to buy and sell based on reason and not on panic.

First of all, with AAV, if I'm up 35% or 38%, what difference does it make? Even if it goes down significantly and I'm only up 20%, is that so bad? I am happy with the stock at these levels and as long as I think AAV can successfully pay that dividend, I will stick with it. I know this will hurt me with AAV because I can see the speculation happening right before my eyes. There's no reason it went up so much in the past week. People are simply gambling that they will raise their dividend or be bought out. New investors are probably getting into the stock in the hopes that it reaches the $20 level it enjoyed not long ago. As a rational investor I want to take advantage of that speculation badly, but as a patient one I will just see what happens. I tell myself, I don't need to make every last dollar; I need to train myself to make good long-term decisions so that when I *do* have a lot of money in the stock market, I won't lose it all.

With GE it's much the same. I have no idea why it moved up today -- none of the recent news seems to justify it -- but I won't let it scare me into selling. I accept that it will probably go down again in a few days. I am in GE long term to make 1000%, not short term to make 3%. Hopefully!

Sunday, June 17, 2007

Lessons from dad's generation

Well it's Father's Day today and of course that made me think about my dad. A lot of people (including me) look to their dads as an example of financial responsibility. He worked hard for his whole life and even though he started off without a whole lot, he's always provided for his family and made it comfortably into the middle class. A person like that can really change the course of a family line's destiny. If I had been born poor, would I have made it as far?

One of the bits of advice from his generation that I'm a bit conflicted about is with regard to debt. They don't like it. Maybe it's a result of *their* parents' generation growing up with things like WWI/II and the Great Depression or just a generally more conservative outlook. In any case, the people I'm talking about are characterized by: making extra payments on their mortgage; putting as much money down for a new house as possible; saving up cash in a special savings account to buy a car with a huge down payment; getting life insurance for their kids when they're like 5 years old.

I see the value in owning your own house, of course. But making extra payments on your mortgage is not good I think! It doesn't reduce your future monthly payment, it just makes the payments end more quickly. If you lose your job or otherwise can't make payments anymore, the bank doesn't say "Oh well you paid extra so we'll let it go for a few months!" For security it would be better to put whatever extra money you would pay towards your mortgage and put it in a high interest savings account. Then towards the end of your mortgage pay it off early if you really want.

With cars, if you can get a special APR from the manufacturer, I think the interest rate is too low to justify putting down more than the minimum. For instance, Honda is having a special right now for APRs from 2.9% to 4.9%, depending on the length of the loan. Hyundai is offering 1.9%. I'm looking for a new car right now so this is an important issue to me -- should I put $5000 down and get a 3 year loan, or put $2000 down with a 5 year loan and leave the remainder in AAV earning a 15% return? I'm leaning strongly toward the latter.

I feel the same way about a mortgage. Rather than pay $200 extra each month, I would stick that $200 in my IRA or regular stock trading account and watch it grow. When you're talking about mortgage time spans, money will REALLY grow. $200 a month has a good chance of being worth more than your entire house after 30 years. That way after 30 years I'll have the house paid off, plus a huge chunk of cash. If I paid $200 extra a month, I'd have the house paid off after maybe 25 years, but I'd have no extra cash. Right now I rent so it's more of a hypothetical issue, but I want to buy a house in the next few years. Wow, I just found a mortgage calculator which lets you test this hypothesis. Indeed, it looks like investing rather than prepaying is the way to go for the situations I tested. Another advantage I didn't even think of is when you prepay you lose a bit of the tax advantage a mortgage gives you, since the extra money you pay goes toward principal and not interest (so it's not tax deductible).

The issue of the down payment is as true of houses as of cars. Let's say you save up for a few years and you expect to get some cash from your parents (and inlaws if you're married). Let's say $15000 total. Then at the last second you say, hey I'm going to just put this money in the stock market for 30 years, and use no money down for the house. Ignoring the ethical implications of re-routing gifted money, what would happen? I don't know. I guess some banks require a minimum down payment so it's a non-issue. I talked to Bank of America recently about the mortgage process and they suggest about 5% down. Let's look at what would happen to the $15k being used on a $120k house in two ways: the minimum down payment and the maximum. We'll assume a 6.4% interest rate (the current average for a 30 year fixed loan according to a Google search I just did). 5% down would be $6k, so the loan amount would be $114k. The monthly payment would be $713.08 a month, for a total payment (after 360 months) of $256,758.80. (Yes, compounding sucks when it's working against you!) With your down payment, the total cost of the house is almost $263k.

In the meantime, the extra $9k that you didn't put towards the down payment has been growing... and growing... let's say at 10% a year (under the long-term average of the stock market, but oh well). We never added anything else and let's say we just put it in an index fund so we never had to manage it or worry about it. After 30 years you would have $157k! So since that money basically came from the house we'll say the net cost of the house is 263k - 157k = $106k. So we got a $120k house for only $106k! Plus the house has probably appreciated since then. Not bad.

Now if we took the entire $15k and put it towards the down payment, what would happen? The monthly payment would be $656.78 and the total payment would be $236k. Add in our down payment and the total cost of the house is... $251k!

So blowing all your cash on a down payment is not a good idea. In this case it more than doubled the net cost of the house. We've also ignored the increased tax deduction that the higher payment gives you, yet another benefit of the first scheme. (But we've also ignored the tax on the investment, which would probably make a huge difference unless it's in a tax-deferred account.)

What I really like about it is that if you lose your job after 10 years and have trouble finding another one for a while, you'll have a nice stockpile of $9k * 1.1^10 = $23k, which, even if it's in a tax deferred account and you pay a penalty to get it out, will definitely give you a nice cushion for those monthly payments.

Friday, June 15, 2007

The search for a discount broker

Summary: Scottrade is bad, Sharebuilder is great, TD Ameritrade is great

When I started investing this time around, things had changed significantly. I used to use Charles Schwab and they charged $29.99 per trade! Now I'm with Scottrade and I have to say... I'm not happy. $7 trades are nice, sure, but all too often their website is frozen for up to a minute. I really mean frozen, not just slow. You click on the "My Account" tab or what have you and it just sits there. No matter what you click, nothing happens. Then a minute or two later, everything works quickly. Their site is never slow, it's either frozen or fast. I've experienced it from multiple locations with multiple ISPs, so I'm pretty sure it's not a problem on my end. It's not a huge deal since I'm not a day trader, but I find it very annoying. I also found it annoying that I sent them a complaint and they never replied, even to say "Only you are having this problem" or something.

The other reason I don't like Scottrade is their lack of an automatic, commission-free, dividend reinvestment program. I was going to open up an IRA with them but that, in combination with one of my favorite stocks AAV, a dividend work horse, stopped me. In the early years, even low $7 trades are going to eat a big chunk out of my IRA's measly holdings. It would also mean that I would have to let dividends just sit there as cash, earning 0.1% interest (gee thanks Scottrade!), until next time I made a contribution. AND it would mean I would have to invest significant amounts of money in the same stocks every year, unless I wanted to forgo share growth in that company.

No, thanks. So I looked around for a more suitable broker. The two I came up with are TD Ameritrade and Sharebuilder. Sharebuilder is, of course, awesome. The $4 trades are pretty much unbeatable, unless you go with a shady startup like Zecco. One problem with their IRA accounts is they have a $25 maintenance fee, but at least you can have that paid from your linked banking account and not from your IRA. The other problem is the "real-time" selling price, which is about $20 -- a bit ridiculous in this day and age. Sure it encourages you to be a long-term investor, but come on. Sometimes you actually do need to sell.

So I went with TD Ameritrade. They have dividend reinvestment with fractional shares, pretty low prices, no maintenance fees, and (I think) better research tools than Sharebuilder OR Scottrade. In fact I like them so much more than Scottrade that I think I will soon transfer my regular account to them as well.

Stocks that I hate


Although my current investments all date from the past 9 months or so, this is not the first time I've been an investor. In college I invested quite regularly. Nearly every day in fact. It was 1999 and making money in the stock market was so easy it was scary. Any company that mentioned biotech in a news report would double in the next few months. Any internet related company would double. I even found a Russian oil company whose stock price fluctuated so regularly that I made money on the ups and the downs. (The company, AO Tatneft, was later discovered to be part of a Russian mob money laundering operation or something crazy. I had already stopped investing by then because it was so freaky. It's disappeared from the stock exchange as far as I know, but I think the company still exists.)

Anyway, a lot of things happened that resulted in my leaving the stock market. I felt like investing had become so psychological that it was too scary to continue. I also felt like investing was somewhat of a waste of time because I only had a tiny bit of money to invest. Doubling a few individual stocks is great and all, but when you only have $500 positions or so, you have to do it *really consistently* to get anywhere. I knew I wouldn't be able to do it for much longer. So I made a little bit of money and quit. I didn't take my money out of the market though. I figured I'd pick a few stocks and let it sit. 2000 was probably the worst possible time to do that! So, that brings me to the first stock I hate:


I like AMD the company because they're A) the underdog and B) they hired basically the entire R&D team behind the awesome Alpha processor, long ago (when I began investing). I think AMD is actually a really innovative company, in terms of technology. I love their HyperTransport interconnect, I love their AMD64 technology, and I thought it was a real coup to get exclusive use of NVIDIA's nForce chipset. And AMD chips were cheap at a time when I needed cheap chips.

As a stock, though, AMD is a DOG. Investors care more about practice than theory. AMD has a long history of failing miserably at putting their technology to work. It centers mainly around production constraints. They can't get big partners (like Dell, etc) because they just can't produce enough chips (on time). They also occasionally get really bad production rates (ie. a lot of the chips fail quality control). They don't have enough money to build a dozen chip fabs to compete on quantity; indeed, they don't have enough money to upgrade their existing fabs to support newer processes (when AMD moves to 100nm, Intel moved to 60nm. When AMD, a few YEARS later, moved to 60nm, Intel moved to 45nm).

AMD's stock success a few years ago was a result of Intel stumbling so badly in terms of technology (the Itanium, and to some extent even the Pentium IV) that AMD started wiping the floor with them. Even though their quantity still wasn't huge, investors couldn't ignore their (slowly) growing market share, especially in scientific fields which the Itanium targeted.

Then Intel said, "Hey guys, we're getting creamed. Let's develop another processor, based on our 10 year old design, the Pentium Pro. We'll also keep developing the Pentium IV, because yes, we can afford having two huge processor development teams." A few years later, their fruits paid off in a major way with the Core series of processors. They have regained the performance advantage and are, of course, outproducing AMD by some huge factor.

Then, in the past year, AMD bought a graphic company called ATI. This was probably a wise move. Intel has been making money off their cheap integrated graphics chipset for YEARS. (It won't play 3d games well, but it's the best selling graphics solution in the world because most PCs only need to display Word and Excel.) Investors didn't like it because now AMD is even deeper in debt.

I really can't say whether it's a good or bad time to invest in AMD. It *could* go up a lot because they will leapfrog Intel in terms of technology. Their upcoming quad-core processors look good. If they can integrate ATI successfully (like having the graphics processor integrated with the CPU) they could do really well.

But in my opinion, investors are just tired of AMD and Intel both. Ever since AMD started competing in high end processors (they used to just be a cheap clone of Intel -- 70% of the performance for 40% of the cost), neither company has as much profitability. Great for consumers, bad for investors. If I had to choose between AMD and Intel for the future, I'd say Intel because it is so big there's almost no chance of it going under. AMD could conceivably declare bankruptcy in a few years if they make even one mistake with their next major processor architecture. (Compare that to Intel, which made several.) Either that or go back to being a cheap clone, losing all credibility.

Since I'm trying to be a smart, patient investor, I don't want to invest in a company that I seriously think could be dead in a few years. Now, if they're not dead in a few years, I am going to seriously consider them again. Processor materials and process advances will probably slow, which will give AMD time to actually catch up to Intel and get some stability in their plants. Stability will hopefully lead to increased yields. They will also be able to justify opening new plants with the latest stable technology. When that happens, Intel is in trouble, because AMD is a much "leaner" company. If they need to compete on tiny margins, AMD has a real shot.


I don't hate ZTR as much as AMD (as a stock), if only because I never expected as much of it and thus I didn't get too disappointed. I have a fairly large (for me) position in it right now because I THOUGHT the large one-day price drop was stock manipulation. ZTR announced a rights offering, which let existing stock holders buy new shares at a reduced price. The price would be the average of the 4 trading days before the offering. I thought, ho ho maybe some big investor has driven the stock down so that he can buy a ton of shares, then it'll go back up. A few days later, it dropped again, and I bought more to get a lower cost average. It dropped again and I thought well screw it. I haven't sold, because ZTR does have about a 10% dividend, even at my entry price. In a year I'll have made back my money and then some. If it goes back up a bit (it does seem to have regular fluctuations) then I'll make out nicely. Right now I'm feeling very wary of it though. It would probably be better to cut my losses and pour more money into AAV... but I really am trying to be a patient investor!


Pfizer is one of those legendary companies with growing dividends that people say, "Put this in your IRA and retire a millionaire." Well when I bought it back in my college days I wasn't interested in a tiny dividend, I wanted some price movement. It moved down. That's when I started hating it.

This time around I thought, hey I don't really have any ideas of what to invest in, let me park my money in PFE for a few months. It lost a couple percent again. Over the past few years (before I was even investing again), I would look at it and say, gee this looks like a good time to invest based on the chart. It generally went down a couple percent within a few weeks, each time. I guess I just don't understand PFE enough to be successful with it.

On top of that, the research I've done lately indicates that PFE could have a rough time for the next few years as its best drugs are losing patent protection and some of its promising future drugs are failing or being recalled. I'm sure that happens all the time for these huge pharmaceuticals, but again I don't know enough about it yet to make a good decision. Now if one day I log on and see that it's dropped on some news story, I might just buy it anyway... but it would have to drop quite a bit!


This is just the tip of a giant iceberg of stocks that I hate, but they're the ones I love to hate. Even though I hate them, I try to keep up with research and trends so that one day in the future we can become friends.

Now let's see what I can do to improve my blog's interface a bit.

Thursday, June 14, 2007

My favorite stocks


My two favorite stocks that I own right now are AAV and GE.


AAV is a Canadian Royalty Trust, which is a special type of company that doesn't have to pay taxes. They are required, though, to distribute their profits to shareholders (or unit holders as they're called). This results in a nice, large monthly dividend.

Well, in October of last year, a Canadian politician proposed that these Canadian Royalty Trusts should be taxed like normal corporations. The share prices plummeted. I read about this in March or so of this year and thought, hey this looks like a good investment. I thought that the price drop was too extreme for the situation -- the trusts keep their current tax status until 2011 -- and the dividends were really nice. In addition, it's *possible* that Canada will reverse this new law, since it might have severely negative effects on their energy industry. Picture dozens of large companies leaving Canada to become American MLPs (another tax-advantaged type of company, but in the US). If that happens, these Canadian Royalty Trusts could return to pre-October prices.

So why did I choose AAV in particular? I looked at many of the largest Canadian Royalty Trusts and honestly I liked all of them. AAV had just made some significant cuts in their monthly distribution, which made its price go down even further. The general sentiment seemed to be that other trusts would have to cut their distributions too, but hadn't yet. This article made me think that AAV had made the right choice in cutting their distributions and now I had a great opportunity to get in while (sadly) the current investors were overreacting and cutting their losses.

Sure enough, it's gone up nearly 30% since I bought it at around $10.30/share. On top of that, I've had a few monthly distributions of about 14¢ per share, which is a bit over 1.3% / month. Not a bad return.

The stock has pretty heavy resistance at around $13, I guess because the newbies who got in are taking profits. I don't blame them, but at the same time, I really don't mind if it stays in the $12 - $13 range, as long as I'm getting that dividend! In the past week, it's broken through $13, perhaps because more people have gotten in at $12 - $13. I bought more shares for my IRA on one of its dip to the middle of that range.

In the future I expect AAV to continue increasing, as long as there isn't another dividend cut. They cut it so much already, though, that I would be really surprised. In fact, there is some sentiment that they will be increasing their dividend, due to higher natural gas prices. (Oh, I neglected to mention that their business is more than half natural gas; the rest is oil.) Natural gas demand is increasing a lot because it is used not only for heating and such, but also in alternative fuel production. Natural gas is used as a source of nitrogen in fertlizers, so increased corn growth (or other crops used for fuels) will result in higher natural gas demand.

In the short term, if there are hurricanes this summer, there's a chance natural gas will spike since imports will be disrupted. It'll take some discipline to sell my AAV in this event, even though NOW I think it would be the right decision. It will probably fall when imports are restored.


Everybody knows GE, of course. As a company, it is pretty well respected around the world as a maker of high tech items like jet engines, as well as "every day" tech like washers and dryers. Of course they do a LOT of other stuff, too. For instance, I learned that GE owns NBC.

Honestly, that is the main reason I want to invest in GE. I like it as a company so I want to be part of it, if only a very small part! The other reason is that looking at GE's stock chart, I think the past few years have not been very kind to it and it's probably time for a change. Looking at the 10 year chart, you can see that, like so many stocks, it started falling in 2000 and started recovering in 2003 (what a great year 2003 would have been to have start investing! ah well). Unlike a lot of respected blue-chip companies, though, GE hasn't even come close to recovering to its 2000 and pre-2000 level.

I've learned that one reason for this is that GE is so BIG that investors find it "confusing." What that means is that if one part of it, like NBC, does extremely well, it has little impact on the stock price because it's still just a small part of the overall company.

I think 7 years is probably long enough that something is going to get done. Sure enough, recently GE sold its plastics division to a Saudi Arabian company for a hefty bit above the value of that division to the company as a whole. Also recently, some stock analyst (I forget which one) stated that if GE were to be split up entirely, the resulting companies together would be worth about $45 per current GE share (which at the time was trading for $35). That's right in line with what I think -- that the "street" has treated GE a bit unfairly and not let the stock price keep up with the strengthening of the company. So I think in the next 5 years or so, GE will have pretty good share price growth as it takes some actions to show shareholders what it's really worth.

Another reason I like GE is the steady dividend growth. I like the idea of long term investing with dividend growth. For instance, if the current dividend (28¢ or so per quarter) increases by 10% or so per year, then in 30 years it will be about $4.80 per quarter! Now of course the stock will have split a few times by then, so it will in actuality probably still be around 30¢ per share, but I'll have more shares. That means that for *today's* investment, I'll be earning about 40% return per year JUST IN DIVIDENDS.

I hear that a lot on websites that talk about the benefits of long term investing in dividend paying stocks, but in my heart of hearts I think it's a big fallacy. After all, the return in 30 years compared to today's investment doesn't matter. In 30 years if I could sell my shares and buy something else that returns 10% a year, it would be better than something that returns 4% a year, right? So in that sense the dividend growth doesn't matter. What matters is the rate of return in terms of the future dollars, because those future dollars tied up in the stock is my opportunity cost for the dividend.

Still, dividends are important. A 4% dividend doesn't sound like a whole lot, but it makes a big difference. If you have a stock that grows at 15% a year, versus one that grows at 19%, does it make a whole lot of difference? Yes: in 30 years, the first investment will have grown 6600%, and the second will have grown 18400%.

Exponents are great because addition of exponents results in multiplication of the results. No matter what your return, if you add 4%, then in 30 years you'll have 1.04^30, or about 3 times as much (hence 18000% vs. 6000%).

Well, this post is getting WAY TOO LONG so I'll stop. Next time I'll write about some of the stocks I hate.

Working on some Javascript

Right now I'm working on a way to have live stock quotes in my blog. When I write a post and want to have the quote shown, I use a tag like <stockquote>GE</stockquote> or <stockquote symbol="DUK">Duke Energy</stockquote>. When the page loads, the Javascript searches through all the <stockquote> elements and composes a list of symbols. It contacts a PHP script on my own web server, which passes the request on to Yahoo Finance. It gets back a CSV list of the data and parses it into Javascript objects. The Javascript then goes back through the page and updates the <stockquote> tags with the price data.

The mechanism is convoluted because browsers don't let you create an AJAX request to other servers. Otherwise the Javascript could request the stock data directly from Yahoo Finance. It sucks, but it works! Here are some samples:

<stockquote symbol="PCU">Southern Copper (PCU)</stockquote> produces Southern Copper (PCU)

Well, Internet Explorer threw a wrench into my plans. I did all my testing in Firefox and was very pleased, but it turns out Internet Explorer doesn't support "fake" tags like <stockquote> very well. I wasn't able to dynamically change the content of the tag. So I've changed it to <span symbol="blah"> and now it works in both!

First Post!!!1

This blog will be about my investments. I will try to be patient over the years and let my money build. I know at some point I will have to take money out to buy a house, or a new car, but hopefully not for anything else!

I've already been investing for about 9 months so I have some positions already. Without further ado:

StockSharesCost BasisMarket ValueProfit

Just a few days ago when the market was down I loaded up on GE and Duke Energy so I'm using quite a bit of margin. It'll be too complicated to constantly keep that up-to-date so I won't try!